Obamacare High Deductible: Build It So They Come

“Where do you want to get your MRI,” Dr. Barry Yeaman asked his patient. “I don’t care, wherever you want me to do it.” The Norman, Oklahoma, family physician tried again.

Dr. Yeaman told his patient about price differences in Norman and nearby Oklahoma City, where the cost of an MRI can vary by as much as a thousand dollars or more. The patient still was not ready to make a decision.

“Patients still defer to the provider. I see it nonstop,” Dr. Yeaman explained to a panel of health care executives convened by HealthLeaders media.

Will They Come?

Build it and they will come? Not yet.

Here we have Obamacare’s next big challenge – not in the courts, but in the rapidly expanding consumer marketplace carved out by high deductible plans, whether on a public exchange and from an employer.

Typically combining both medical and prescription drug expenses, the deductibles far exceed the IRS high deductible definition of $1,300 for an individual and $2,600 for a family.

Next year, all 30,000 employees of the Carolinas Healthcare System will have only one health coverage option – a high deductible plan. It will require individuals to pay up to $5,600 and families up to $11,200 a year out of pocket in deductible, copays and coinsurance.

With their own money at stake, consumers theoretically will shop for better prices and higher quality, thus forcing health care to deliver greater value. Fact is, such consumers are about as real as ball players emerging from an Iowa cornfield.

The better answer is “build it so they come.”

Underinsured and Unable to Choose

A few consumers do come to shop, believing they know something about health care, only to be thwarted by opaque and unavailable pricing, even when required by law, or surprise bills from providers they have never met.

However, like Dr. Yeaman’s patient, most consumers are unable to choose. Facing tight budgets, many simply buy less of everything instead of choosing needed medications over optional skin cream, according to the Rand Health Insurance Experiment.

In another example, employees at a company with a new high deductible plan cut back on prescription drugs. They did so although the high deductible did not apply to the pharmacy benefit. The National Bureau of Economic Research suggested employees were unaware of benefit design details and possibly skipping physician visits.

For a significant number of consumers, whether they have the skills needed by today’s health care shopper is beside the point. They do not come to market simply because they do not have the money to participate.

According to the Kaiser Family Foundation, 37% of U.S. households do not have enough liquid assets to meet individual and family deductibles of $1,200 and $2,400 respectively. Doubling the deductible levels increases to 49% those who do not have enough liquid assets.

As many as 31 million adults with employer provided coverage were underinsured last year. High deductibles alone put 7 million in that category, according to a Commonwealth Fund study. Half had problems with medical bills or medical debt. Meanwhile, the Consumer Finance Protection Bureau reports that half of all overdue debt on credit reports stems from unpaid medical bills.

Last year, among adults fully insured with a public exchange plan, one in four reported they went without some needed medical care because they could not afford it, according to a recent Families USA study.

The High Deductible Squeeze

Health care organizations across the nation are feeling the impact of high deductible health plans. According to Crowe Horwath, insured patients’ bad debt and charity rates were up 22 percent and 130 percent last year in Medicaid expansion states, and 35 percent and 130 percent in non-expansion states.

The Advisory Board reports that Healthcare providers are collecting $0.18 to $0.34 on the dollar from patients with high-deductible plans. Once a bill exceeds 5% of household income, payments are nearly zero.

Last year, when Federal Express instituted a high deductible plan with health savings accounts, Methodist Le Bonheur Healthcare in Memphis was running $17 million behind budget by the end of the first quarter. Some hospitals like St. Luke’s in Kansas City are insisting on 25% prepayment.

Drug companies are feeling the pinch, too. According to the Families USA study, 14.2% of those newly insured on the public exchanges went without needed medications because of high deductibles and copays. Up to 16% of cancer patients quit their treatment plans because they cannot afford out of pocket costs for life-saving oral cancer medications, according to a recent University of North Carolina study.

Even clinical pathology labs are seeing revenues decline as more patients in high deductible plans fail to pay their bills. Labs like Arizona’s Sonora Quest Laboratories have begun asking patients to pay in advance, as they aim to collect millions they had previously written off.

Health Care Responds

Health insurers and employers are responding with new, value based benefit designs that encourage consumers to make wise health and financial choices. These plans typically lower consumer out of pocket costs for services that support better health, such as prescriptions for chronic conditions. University of Michigan researchers studying such a plan used by Connecticut state employees suggest there is better control of chronic conditions.

Writing in the Boston Globe, one of the researchers explains that value based benefit plans “rely on consumers to understand their benefit design and evaluate different costs for various services.” Betsy Cliff admits, “That kind of consumer education isn’t routine.”

However, some organizations are making impressive attempts. Kudos go to the American Gastroenterological Association (AGA), for example. As a template for all-in colonoscopy pricing, it is using the pricing sheet – known as the Monroney sticker– pasted on new and used car windows. Meanwhile, MetroHealth System has put a 38-foot RV on the road in Cleveland staffed by three financial counselors to answer consumer questions.

Three SEO Keys

Across health care, leaders and communicators must challenge themselves to build a less complicated healthcare marketplace so consumers will come and shop. Here are three SEO keys for doing so:

Simplify the Market: Bundle, package or just better organize quality measures, outcome data, pricing and billing. Like the AGA, look to other industries for simplification strategies. Be transparent, accessible and responsive.

Educate the Consumer: Before they become patients, teach consumers how to become good healthcare shoppers. This is a job for every part of health care, not only payers. Like Cleveland’s MetroHeath, go into the community.

Offer Options: For those consumers who do not have enough money, even if insured, provide them with low or no-cost options for health care and prescription medicines. Identify and meet other needs to enable healthy choices.

Whether a baseball field, website or the healthcare marketplace, “Build it so they come.”